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Forint loses more than 1%, stocks fall as gas worries mount


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BUCHAREST — Hungary’s forint weakened more

than 1% on Monday and central European stocks flirted with new

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lows as fears rose over the harsh economic impact of Russia’s

halt to gas supplies through its main pipeline to Europe.

Data showed further signs of economic slowdown in central

Europe as inflation singes consumption and energy prices soar.

Czech real wages declined at the sharpest pace in decades in the

second quarter while Hungarian retail sales growth eased in

July, according to releases.

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The poor economic view added to market nerves as focus was

sharply on news that Russia said gas supply via its main

pipeline to Europe would stay shut, sending gas prices surging.

The forint, which has touched new historic lows in recent

months and has taken the brunt of risk selling in central

Europe, had fallen 1.2% by 1020 GMT, to trade at 404.6000 to the

euro, its weakest since end-August. It hit an all-time low of

416.89 in July, although interest rate hikes have helped steady

it at times.

“CEE economies are showing signs of slowing and the

geopolitical story has not changed,” ING Bank said. “Thus, it is

hard to look for additional support from central banks and

interest rates for FX.”

The forint has lost 8.6% against the euro this year. Last

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week, Hungary’s central bank took its key interest rate to

11.75% and announced new measures to tighten forint liquidity.

“As long as this (pressure on energy prices) persists, and

it is not expected to abate anytime soon, the forint will not be

able to firm meaningfully,” a trader said.

Elsewhere, the Czech crown and the Romanian leu

were down 0.2% and 0.1%, respectively. The Czech

central bank has maintained a mandate to intervene in markets to

prevent excessive currency fluctuations.

The Polish zloty was down 0.7% at 4.7380 per euro

ahead of a central bank rate-setting meeting on Wednesday.

Analysts have estimated a quarter-point interest rate hike, but

high inflation might boost expectations.

“If the MPC does not decide to make a decisive move on rates

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(50 basis points) or tighten the rhetoric, the risk of zloty

weakening increases,” Alior Bank said.

The sharp market moves come as European Union energy

ministers meet at the end of the week to seek ways to cool

energy markets, with electricity bills rising fast around

Europe, hitting consumers and economies.

Stock markets around the region fell on Monday, with

Prague’s index down 1.2% on the day at its lowest level

since May 2021. Budapest was also 1.2% lower at a

seven-week low, and Warsaw’s fell 0.7%.

In Bucharest, the blue-chip index bucked the trend,

up 0.9% on the day as markets were digesting the impact of a new

government support scheme for energy bills.

CEE SNAPSHO AT

MARKETS T 1157

CET

CURRENC

IES

Latest Previou Daily Change

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s

bid close change in 2022

Czech

Hungary 0 0

Polish

Romanian

Croatian

Serbian 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change

s

close change in 2022

Prague 1137.15 1150.11 -1.13% #VALUE!

00

Budapest 41329.9 41941.2 -1.46% -18.51%

5 7

Warsaw 1503.19 1505.75 -0.17% -33.69%

Buchares 11937.3 11838.4 +0.84% -8.61%

t 9 1

Ljubljan <.sbitop a>

Zagreb 1987.99 1992.68 -0.24% -4.39%

Belgrade <.belex1>

Sofia 609.81 611.09 -0.21% -4.07%

Yield Yield Spread Daily

(bid) change vs Bund change

in

Czech spread

Republic

2-year s

5-year s

s

Poland

2-year s

5-year s

s

FORWARD

3×6 6×9 9×12 3M

interba

nk

Czech 7.41 7.44 7.12 7.26

Rep

Hungary 14.81 15.10 14.80 12.81

Poland 7.77 7.88 7.72 7.15

Note: are for ask

FRA prices

quotes

*********************************************

*****************

(Reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague,

Gergely Szakacs in Budapest and Pawel Florkiewicz in Warsaw;

Editing by Emelia Sithole-Matarise)

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